What Africa needs from banks to achieve its energy transition

Many of the projects funded in recent years were initiated five to seven years ago.

Rentia van Tonder (left) and Aadil Cajee

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By Rentia van Tonder, Head of Power, and Aadil Cajee, Head of Energy & Infrastructure Finance at Standard Bank CIB

The future of energy in Africa will not be determined by policy alone. Nor will it be unlocked by capital in isolation. If Africa is to achieve a secure, affordable and lower-carbon energy system, financial institutions must fundamentally rethink how they engage with the sector to ensure success and sustainable growth.

What is needed is a holistic approach from market participants, specifically capital providers shifting to long-term, strategic partners who help shape entire energy ecosystems. This demands more than financial acumen. It requires sector expertise, regulatory engagement, localised presence, and the foresight to support market structures that may not even exist yet.

This is also not a future aspiration. It is already happening and delivering results in many parts of Africa.

A continental energy market in transition

There are few countries where this shift is more evident than South Africa. Regulatory reforms, including the removal of licensing thresholds and liberalised grids together with the move to a multi-market model, have catalysed private sector participation. The rise of corporate PPAs, embedded generation and trading platforms marks a turning point in how energy is generated, sold and consumed.

Importantly, this shift has been matched by execution. As of 2025, Standard Bank has participated in over 10 000 MW of closed deals. This includes utility-scale projects through programmes like REIPPPP and RMIPPPP in South Africa, as well as distributed generation and battery storage, backed by a growing mix of private offtakers and new trading intermediaries in markets outside South Africa. These deals do not just highlight our internal capacity; they point to the expanding opportunity across the broader energy market. They are, in many ways, just the tip of a very large iceberg.

However, the story of these successful deals is not merely about deploying capital. It begins with planning, a strategic vision and focus.

From reactive lending to long-term partnership

Energy projects rarely start with a funding request. They begin with a pain point such as unreliable supply, tariff instability, or rising ESG pressure, and a business or government entity trying to solve it. The bank’s role is not just to evaluate a proposal. It is to co-create a workable solution, helping shape the structure, navigate regulation and build resilient financial solutions and products.

Many of the projects funded in recent years were initiated five to seven years ago. They began with conversations around business models, changing environments, technologies and regulatory feasibility. These long-term engagements, often seen as premature or complex, now underpin some of the continent’s most successful energy initiatives which includes innovative thinking and solutions that are market leading even by developed market standards.

Local presence and knowledge matters

Of course, while Africa’s energy opportunity is immense, it remains highly context specific. Regulatory regimes and execution risks vary across borders and navigating this environment requires more than capital; it requires strong relationships. The ability to navigate local utility frameworks, engage with national regulators and structure deals in-country remains a key enabler of project success.

With teams in 20 African markets, Standard Bank brings local insight and influence. This helps resolve regulatory hurdles, manage risk and connect investors to in-country opportunities. Such local presence has proven vital in closing complex deals across Zambia, Namibia, Kenya and Eswatini. These were not high-volume, off-the-shelf transactions. They were carefully structured, often first-of-their-kind partnerships with aligned public and private stakeholders.

Aggregation: a flexible model for a complex market

One of the most transformative developments now taking shape across Africa is the emergence of aggregation in the power sector. This model allows multiple independent power producers to supply electricity to multiple offtakers, creating scale, flexibility and levels of access that single-asset deals often would not be able to.

Aggregation enables corporate users – particularly those without the scale or capital to fund their own generation – to access clean energy more affordably. It also broadens the base of offtakers, improving bankability and spreading risk, providing flexibility. In a country like South Africa, where grid constraints and regulatory fragmentation are persistent obstacles, this kind of market mechanism is not just innovative, it is essential.

Standard Bank has played a leading role in enabling this transition, supporting key aggregators/traders and helping build the financial structures needed to make these deals viable. This work has been underpinned by early insight into policy direction, strategic internal planning and deep alignment and understanding of client needs combined with innovation.

A commitment to enabling sustainable growth

Alignment between commercial objectives and developmental outcomes is vital. Energy finance must support industrial growth, economic resilience and climate goals. It is not just about ESG compliance. It is about enabling African economies to grow sustainably, with power systems that are secure, affordable and compatible with long-term decarbonisation efforts.

As the market evolves, so must its financial institutions. This means stepping beyond transactional models and adopting long-term, sector-led strategies. Banks must be present, informed and involved from early planning to final deal execution and implementation. Those that take this path will remain relevant and help define Africa’s energy future.